Naira hits 3-week high on offshore dollar sales

The Naira hit a three week high against the U.S. dollar yesterday at the interbank market, on the impact of support by low demand for hard currency and dollar inflows from foreign banks.

Consiquently, it closed at N157.05 to the dollar at the interbank, firmer than the N157.30, it closed at on the last trading day last week Wednesday. The last time it was higher than Monday’s level, it closed at N156.45 to the dollar on October 4.

“The market was very liquid from dollar sales by some foreign banks and offshore investors buying local debt and this boosted support for the naira,” one dealer said.

Traders said weak demand for dollars at the official window also helped to strengthen the naira, as most banks were selling down their positions.

The Central Bank of Nigeria (CBN), had initially offered to sell $100 million at the bi-weekly auction, but ended up selling $43.5 million at N155.76 to the dollar, compared with $142.96 million sold at N155.76 to the dollar at the last auction on Wednesday.

Traders said the Naira could strengthen further in the near term if the country’s sole petroleum s firm the Nigerian National Petroleum Corporation (NNPC), and other oil multinational companies sell dollars this week, as expected.

The NNPC, supplies the bulk of foreign exchange sold on the interbank market.